The present digital media landscape has been described in some quarters as a “long winter”. The hunt for advertising revenue gets harder the longer the winter lasts, and many commentators are speculating as to what, if it eventually arrives, spring will bring.
For many, a new means of funding digital media is at the top of the wishlist.
BuzzFeed and Vice have made high profile staff cuts recently – each shedding 250 jobs – and given the profile and standing of these two new media powerhouses, some are seeing this as a cause for concern. In addition, a recent review of the state of UK journalism by Dame Frances Cairncross seems to lay some of the blame at Facebook and Google’s doors, and at the “ad click” funding model for failing to sustain the industry.
Have we, as an industry, got it all wrong in putting our faith in the ad-funded, free-to-access model? Should we make people pay for our content? Or do we need a new model altogether?
I still think the answer to all of these questions is “no”, and I also believe that our industry is in one the strongest positions it’s been in for a very long time. We’re still very much within a long hot summer.
A proliferation of media and journalism jobs was caused a decade ago by the dawn of the VC-backed, digital-first, hyper-growth media startups, and also by the emergence of higher speed internet. This was great news for me as a young journalist at the time – and for thousands of other young journalists.
I’d been approaching my job search at university as a full-time job in itself, and for love nor money I couldn’t get a (barely higher than) minimum wage internship or cub reporter role in a print publication.
Then Trinity Mirror announced a host of new “digital” jobs, and suddenly, as a digital native, I’d managed to land myself a job with a respectable salary doing something that I absolutely loved – writing entertainment content for a young, digital audience. This audience weren’t regular readers of a newspaper, and so I felt like I had a hand in growing the company’s readership, rather than cannibalising the newspaper audience.
Many companies like Trinity Mirror brought new jobs to the market, requiring new skills. The New York Times employ more journalists (1,600) now than at any point in their illustrious history, and companies such as BuzzFeed, Vice and Vox employ thousands of journalists around the world.
But therein lies the “problem”. Many of these companies and these roles didn’t exist before the turn of the millennium, and while the industry is supporting the employment of more journalists than ever before, the slice of the advertising pie gets smaller for each of these companies as more and more competitors enter the market.
As anyone who has ever worked in a media company’s sales department will know, sometimes it’s much easier to sell something fresh and shiny than it is to sell the same tried and tested solution you’ve been selling for years.
And companies like BuzzFeed and Vice did just that, bringing fresh, shiny (and effective) solutions to the ads market. They were able to build commercial models, and steal share of the advertiser pie from the competition, without having to worry so much about the margins due to their funding.
These content-focused ad solutions have had a huge impact on the industry, and it didn’t take competitors long to catch up. Suddenly, the market shifts a little again, and competitors start to win back the share of the advertising pie they initially lost. There will always be winners and losers.
For individual companies like BuzzFeed that have quickly and impressively gone from a few creatives in a room to global media entities, making adjustments to their expenditure doesn’t spell doom. Just as the case of Insider Group, which looks to have surpassed the $100m revenue mark in 2018, and which claims to be profitable, doesn’t categorically prove that the sponsored content model works.
What doesn’t make life any easier is the domination of Google, Facebook and Amazon in winning the lion’s share of advertising spend, but the volume of digital ad spend going to companies outside of the big three has risen year on year for the last decade in the US.
For anyone on an exec team or in a boardroom, this stabilisation of the new media market is all a natural part of the game. But for those on the receiving end of redundancies, it sucks. I know, because I’ve been there.
But it’s not all doom and gloom. Though it’s hard to accurately measure, I still believe there are more paid opportunities out there for content creators and journalists than ever before, and the best creators no longer have to spend years making tea and coffee in TV studios or newsrooms before they’re allowed to prove themselves, because social media and blogging gave us all an opportunity to build our profile and prove our abilities.
And the reality is, the advertising pie is still enormous. But there are more mouths at the table, and less and less people are buying print products. This will continue to stabilise over time, which will mean we’ll continue to look at an unpredictable jobs market. But when it does finally stabilise, there will still be enough pie to feed more mouths than ever before.
And that’s because of the strength of the sponsored content and targeted distribution models online. It’s a model that works well for the media company, for the advertiser, and for the user.
Good sponsored content means that users see advertising that’s relevant to them, which yields a good ROI for the advertiser, which means the media company can charge healthy CPMs or CPCs.
If it’s driven by good data and targeting, then there aren’t many advertising methods out there that are more effective.
Richard Beech is chief strategy officer at DriveTribe and has previously worked for the BBC, Joe Media and BuzzFeed. He tweets at @BeechardRich